Prosecution: Bat Yam mayor to be indicted pending a hearing

Charges include accepting NIS 900,000 in bribes and not reporting NIS 8 million in income, but hearing likely to wait six months.

After a year and a half of indecision, the tax and economics prosecution in the Tel Aviv District Attorney's office announced Monday it will issue an indictment against Bat Yam Mayor Shlomo Lahiani, pending a hearing. Lahiani is to be charged with accepting bribes of NIS 900,000 and failing to disclose NIS 8 million in income, as well as fraud and breach of trust.

It is doubtful the hearing will happen before the municipal elections scheduled for this coming October.

The announcement of the hearing attributes five affairs to Lahiani: two involving acceptance of separate bribes from the owners of the Bat Yam Mall Super-Dosh and of Cup 'O' Joe, one concerning the local newspaper Gal Gefen Tzahov, another regarding loans from employees and the fifth involving concealment of income.

At the heart of the charges is the suspicion that Lahiani accepted bribery from Ezra Dosh, the owner of a successful chain of supermarkets in Bat Yam called Super-Dosh. In 2005 Lahiani and his brother, Avi Lahiani, allegedly approached Dosh during the course of his son’s bar mitzvah and asked him for a NIS 200,000 loan. Dosh gave the check to the mayor’s brother, who deposited it into his personal bank account and then transferred the money to the Elshav company owned by Shlomo Lahiani.

The loan was given without interest and unlinked. It was not repaid in full and in return it is suspected that Dosh received aid in his business from Lahiani’s brother Avi. Dosh too will be charged with giving a bribe, pending a hearing, and Avi Lahiani will be charged with mediating a bribe, pending a hearing, for his part in taking the bribe money from Ezra Dosh. According to the prosecution’s evidence, Avi Lahiani received a sum of NIS 150,000 from Dosh.

Lahiani will also be charged with accepting a bribe from Avner Krieff and his brother-in-law Ovad Dodtachi, the owners of the local branch of Cup 'O' Joe and the Gargirim restaurant, both located on the city's promenade, and other interests in Bat Yam. In this case, too, evidence has been found that Lahiani and his brother approached Krieff and Dodtachi with a request for a loan of hundreds of thousands of shekels. He could also be charged for laundering money related to the bribery.

In the third affair, Lahiani is expected to be charged with counts of fraud and breach of trust after having instructed municipality employees to take out bank loans amounting to NIS 440,000, money that was transferred to him for the payment of his debts to banks. The investigation found that a number of Lahiani’s cronies at the municipality, some of them activists in his campaign headquarters whom he later appointed to high positions, loaned NIS 50,000 each to the mayor’s construction company in 2005. The loans were repaid monthly with cash deposits of NIS 1,000 into the lenders’ accounts.

The prosecutor says Lahiani took advantage of his status, his position and his authority as mayor to have the senior employees go to Union Bank and take out the loans for him. Because of their subordinate relationship to Lahiani, according to the prosecution statement, and the embarrassment that would be entailed in refusing, the workers were compelled to accede to Lahiani’s request and were exposed to debts of tens of thousands of shekels over the course of several years. The prosecution sees these deeds as improper receipt of benefits and a serious conflict of interests.

When Lahiani was asked how nine loans from top-level officials in the Bat Yam municipality came into his bank accounts, Lahiani replied that he had not known about the loans in real time. However, the lenders said in the investigation that it was Lahiani who had asked them to take out the loans since he was having financial difficulties. Two months ago Lahiani told Haaretz that regarding this affair there was no dispute as to the facts since the loans were given in broad daylight and that he had reported them to the comptroller. The dispute, he said, is about the interpretation of the facts.

Another brewing charge against Lahiani concerns the local newspaper Gal Gefen Tzahov, in which evidence was found for indicting Lahiani for entering into a prohibited contractual agreement, perjury and breach of trust. The affair has to do with Lahiani’s 45 percent share in Gal Gefen Tzahov, which since he became mayor received regular payments from the Bat Yam municipality, for ads worth hundreds of thousands of shekels over the years. Lahiani did not report his stake in the newspaper. After government supervisors inquired about his holdings in the paper, Lahiani carried out a fictive transfer of his shares and made a false declaration under the Local Authorities Law.

The fifth and final set of charges involves NIS 8 million discovered to have been deposited between 2004 and 2008, for which Lahiani has no explanation. The prosecution intends to try him for not reporting the income to tax authorities.

'No connection to reality'

Shlomi Lahiani asked State Attorney General Yehuda Weinstein to personally conduct a hearing. "A five-year investigation, six months before elections, seven hours after I announced I was filing a petition to the High Court of Justice, the prosecution decided to call me to a hearing," Lahiani wrote in a statement Monday night.

"There's no connection between reality and the prosecution's claim. It's a snowball rolling out of control."

Lahiani called on the attorney general to conduct the hearing because only he could "check the facts without bias.

Professor Kenneth Mann, Lahiani's defense attorney, commented: "By the end of the hearing it will be clear that Shlomi Lahiani acted innocently regarding all the issues raised in the prosecution's letter, and that the conclusions which the prosecution reached are incorrect."

Biting report

The investigation of Lahiani began after a biting report which former State Comptroller Micha Lindenstrauss issued in 2007 about his conduct in Bat Yam. Inter alia, the report stated that Lahiani manned key positions in the municipality with activists from his election campaign and with cronies, contrary to all rules of proper administration.

A police investigation found extraordinary deposits of millions of shekels in cash into the bank accounts of the construction company Lahiani owns, Elshav. The national economic crimes unit conducted an undercover investigation for two years, revealed in December 2009 with Lahiani’s publicized early-morning arrest in front of Channel 2 cameras. The police recommended indicting Lahiani in September 2011 for accepting bribes from a number of top officials at the municipality as well as from business owners.

The Tel Aviv District Attorney's office, which specializes in tax and economic crimes, took over the investigation at that point. A rider to the case connected to the relations between Lahiani and Supreme Court Justice Yoram Danziger was a significant element in delaying the decision on the case.

The office investigated Danziger on suspicion that prior to his Supreme Court appointment he gave legal services as a private lawyer in personal matters to Lahiani without recompense. In return Lahiani allegedly saw to it that Danziger’s law firm would deal with various Bat Yam municipality matters, for which it received over NIS 800,000. Another suspicion against Danziger concerned a prima facie misrepresentation he made to Union Bank when he dealt with Lahiani’s business with the bank. The police recommended closing the case against Danziger for lack of guilt. Noam Uziel and a new team of prosecutors were then assigned at the Prosecutors’ Office to accompany the Lahiani case.

Lahiani, 48, was elected mayor of Bat Yam in 2003 after having served there as opposition leader for five years. He was esteemed as a mayor for transforming Bat Yam's image from a seaside city with a criminal element to a well-kept city boasting an education prize. In the last elections, in 2008, Lahiani won by a landslide of more than 85 percent of the votes and even after his front-page arrest he was greeted enthusiastically in the city.

Beyond the local level, he has been considered a charismatic politician who marked the mayor’s office as his final target. He supported Kadima chairman MK Shaul Mofaz in the recent Knesset elections, but was also in contact with Yair Lapid, now the finance minister, even before the latter declared his entry into politics.

In a similar case, the High Court of Justice will likely deliberate Wednesday on the petition submitted by an opposition councilman in the Ramat Gan municipality to force Ramat Gan mayor Zvi Bar from office in the wake of the his indictment on charges of accepting bribery. The law stipulates that a mayor cease serving in office only after he is convicted of a crime of moral turpitude.

The prosecution’s position in its reply to the High Court of Justice is that it is necessary to act in accordance with the law, but top officials at the State Prosecutor’s Office agree that in a case of serious indictments it is necessary to act otherwise and consider suspension, as is the case with civil servants.

Suspending a mayor from his position after filing a serious indictment against him is liable to raise other complex questions when municipality employees appear on the list of witnesses against him. A situation like this gives rise to the concern that municipality employees would be hesitant to testify against the mayor for fear of losing their jobs.

In the February report in Hebrew on this issue, Haaretz asked Lahiani how he would be able to continue running the city while being busy defending his name in court.

Lahiani replied: “It’s a lot worse when they come to your home at five o’clock in the morning with cameras – that disrupts running a city a lot more.”

The interview continued:

But that is behind us.

“What you are talking about will also end.”

But it could take years.

“Either it will or it won’t.”

On the list of prosecution witnesses it is expected there will be employees of your municipality. How will they be able to testify against you when you remain in your position?

“There isn’t any problem. All the people in the affair of the loans are people who have been my friends since the Scouts for at least 20 years.”

There is an employee in the construction inspection department who has already received a protection order from the state comptroller as a whistle-blower. It will be hard for employees to testify against you.

“You’re right. I understand what you are saying. We live in a country of law. Everyone has to come to court and tell the truth and peace be unto Israel – what’s the problem? You don’t think anyone is going to do anything against anyone. It’s not real, it’s not true.”